Bank Loan Supply, Lender Choice, and Corporate Capital Structure
This paper explores the relevance of capital market supply frictions for corporate capital structure decisions. To identify this relationship, I study the effect on firms' financial structures of two changes in bank funding constraints: the 1961 emergence of the market for certificates of deposit, and the 1966 Credit Crunch. Following an expansion (contraction) in the availability of bank loans, leverage ratios of bank-dependent firms significantly increase (decrease) relative to firms with bond market access. Concurrent changes in the composition of financing sources lend further support to the role of credit supply and debt market segmentation in capital structure choice. Copyright (c) 2009 The American Finance Association.
Year of publication: |
2009
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Authors: | LEARY, MARK T. |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 64.2009, 3, p. 1143-1185
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Publisher: |
American Finance Association - AFA |
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